Bob Brinker's short list of individual stock picks goes back over 23 years with very little change. The two oldest stocks on this list of off-the-books picks are Microsoft and Vodafone. The two latest additions are Suncor and GLD (gold ETF). Both were added in May 2009.
Let's review how well those who have followed Bob Brinker's advice on Microsoft have done.
I do not know Brinker's original buy price for Microsoft. I am told by some that they remember one of Brinker's appearances on Nightly Business Report in 1998 when Kirk Lindstrom called in and asked Brinker a question about his Microsoft pick. (I cannot find documentation of that call.)
June 17th, IN EDIT: Good news! The resident Bob Brinker Super-Sleuth, Jeffchristie, sent the location of this transcript.
Guest Appearance - The Nightly Business Report, July 23, 1999KANGAS: My guest market monitor this week is Bob Brinker, editor of "Bob Brinker's Marketimer" letter, and Bob of course is also the popular host of ABC radio's weekend program "Money Talk." Welcome back, Bob.
BOB BRINKER, EDITOR, "BOB BRINKER'S MARKETIMER": Thanks, Paul. Great to be here.
KANGAS: You know, you have been one of the most unwavering bulls of this entire decade as far as your market letter is concerned, but am I noticing a little addition of a more a cautionary tone to your recent letters?
BRINKER: Well, Paul, it's been a tremendous run, as you know, for nine years. We're up about 400 percent in the major indexes since 1990, and valuations have skyrocketed. We're up around 27, 28 times S&P earnings for 1999. This has been the "mother of all bull markets."
KANGAS: So, overvaluation is a problem with you?
BRINKER: Valuation is something we have a great deal of respect for. There are a number of factors we're looking at right now, the Federal Reserve, in our view, has been tightening monetary policy in recent months. There is a possibility we could be looking at a synchronized global economic recovery going forward. That could give rise to inflation concerns at the Federal Reserve. They're already preoccupied at the Fed, as you know, about the very tight labor markets. So, we're watching that. Obviously, interest rates have backed up in the last nine months, and investor complacency is amazing today. It seems as though many investors think 20, 30 percent a year is a national birth right.
KANGAS: So, what do you see ahead now, Bob?
BRINKER: We're watching all of these factors very carefully, and we're not making a change at this point. But if we have to change our investment policy, we will change it.
KANGAS: Well, we've gotten to 11,200 on the Dow, and do you see maybe that's about it for a while?
BRINKER: Well, I think that the 11,000s could be real difficult to climb through. I think there's a lot of stock for sale in the 11,000s.
KANGAS: All right. Now, in tonight's "ask the market monitor" segment for our viewers, Kirk Lindstrom of Los Altos, California, who watches us on KQED, asks, "why have you had Microsoft as a 'hold' for so may years in your newsletter rather that a 'buy on pullbacks?'" You recommended (msft) on this program in the early 90's.
BRINKER: Well, we certainly should thank the viewer for reminding us of Microsoft. You're right, Paul. Right here on the NIGHTLY BUSINESS REPORT, also in "Marketimer" we initially recommended purchase of Microsoft in 1990 at a split adjusted $2 a share. And in the newsletter we called it the technology stock for the 90's. Now we're up over 4,500 percent on that recommendation.
KANGAS: So, are you taking money off the table now, Bob?
BRINKER: Well, we're holding the stock. We did maintain, to answer the viewer, we did maintain "buy" points for several years. But now we're at 60 times next year's earnings on Microsoft, so we're going to stay with a "hold" for now. That's a rich stock."
[See the comments section for the remainder of this Kangas/Brinker transcript.]
Honey here: Now that we know Brinker's original buy price and know for certain he never sold the stock to take his sizable profits, let's just go back five years to when we have proof that Brinker issued a new buy price on Microsoft, and see if history repeated itself:
April 5, 2003, Marketimer, Bob Brinker said: "On March 11, we upgraded Microsoft to "buy" at a price of $23, and we upgraded Vodafone to "buy" at a price of $17 on that date."So how has Microsoft done for those subscribers who bought five years ago at $23 and held it ever since on Brinker's recommendation? Let's check it out:
* Firstly, there have been no Microsoft stock splits in the last five years (the last split was in February 2003).
*Microsoft has been as high as $37 in 2008 (what a great time that would have been to sell). It then dropped to $15 in March 2009. So in one year investors lost nearly 70% of their money.
* Today, it closed at $24. So after a roller coaster ride up and then down, the NAV is currently up ONE DOLLAR since Brinker upgraded it to "buy" in 2003.
* Right now, Microsoft is currently paying a moderate dividend of 2.60%, so basically the only value added in the past five years was the dividends received.
* Why does Brinker, a "market-timer," continue to hold this stock? Perhaps he simply doesn't care what it does because he never has to report on this list of stock picks unless they make him look good. And none of them are included in his official performance record or reported on by Mark Hulbert of Hulberts Financial Digest.
Jim nailed it couple of years ago when he wrote:
Jim said......
As for Brinker's other picks, it looks like Vodafone may have done slightly better than Microsoft and right now is paying a 7% dividend. Suncor is up from Brinker's latest buy price of $33, but has taken a hit recently with the drop in oil prices.
The gold ETF (GLD) is up from the price it was in May 2009 when Brinker added it to the list of picks, but Brinker has never indicated a buy price on it.
Brinker has always said that "individual stock holdings should be limited to 4% of equities in order to manage stock risk," but he has never said whether or not this rule applies to GLD even though it is an ETF.
Matter of fact, Brinker has never given any reason why he added GLD to Marketimer, but it might have something to do with having bragging rights, as he has often done on Moneytalk since gold has done well the last couple of years. At the same time, he has the option of saying nothing if it doesn't do well. That's what's called being in the "Cat Bird Seat." :)
Microsoft, five years:
- I think Brinker said many times that an investor should not fall in love with a stock. Too bad he fell in love with Microsoft.
As for Brinker's other picks, it looks like Vodafone may have done slightly better than Microsoft and right now is paying a 7% dividend. Suncor is up from Brinker's latest buy price of $33, but has taken a hit recently with the drop in oil prices.
The gold ETF (GLD) is up from the price it was in May 2009 when Brinker added it to the list of picks, but Brinker has never indicated a buy price on it.
Brinker has always said that "individual stock holdings should be limited to 4% of equities in order to manage stock risk," but he has never said whether or not this rule applies to GLD even though it is an ETF.
Matter of fact, Brinker has never given any reason why he added GLD to Marketimer, but it might have something to do with having bragging rights, as he has often done on Moneytalk since gold has done well the last couple of years. At the same time, he has the option of saying nothing if it doesn't do well. That's what's called being in the "Cat Bird Seat." :)
Microsoft, five years:
